Bessie Liu

A way to earn sustainable yield has landed in Southeast Asia.



Cryptocurrency asset management platform Finblox is bringing tokenized US Treasurys to emerging markets across Southeast Asia.



The Singapore-based startup’s self proclaimed “superapp” will be partnering with OpenEden to bring a smart contract vault that provides 24/7 access to tokenized Treasury bills.



The plan is for the product to be made available to customers in the Philippines, Indonesia, India and Vietnam.&nbsp;&nbsp;



A significant portion of the unbanked population live in emerging markets, Peter Hoang, CEO of Finblox told Blockworks. The partnership ought to offer a safer, less risky mechanism to offer sustainable <a href="https://blockworks.co/tag/yield">yield</a>, he said.&nbsp;



“Treasury bills are considered to be one of the safest assets on earth,” Hoang said. “OpenEden is an institution that is accredited and licensed by the Monetary Authority of Singapore, and are aligned with our vision of democratizing finance and building in a safe and transparent way.”



Hoang said tokenized Treasurys will give international investors the opportunity and flexibility to invest in safe and secure assets at smaller clips.&nbsp;



OpenEden’s Treasury bill vault will be integrated with <a href="https://blockworks.co/tag/chainlink">Chainlink</a> and will provide on-chain evidence that its tokens are backed by actual assets.&nbsp;



“Through the OpenEden TBILL Vault, our partners can offer low-risk cash management products that generate sustainable yields from U.S. Treasuries to their users,&#8221; Eugene Ng, co-founder of OpenEden, said in a statement.



T-bill tokens will not be transferable, but users can withdraw the token from the vault after five days to avoid a duration mismatch.



“We’ve seen the downfall of many players last year because of unsustainable practices. This has caused a lot of mistrust in the entire crypto space… we believe that [US Treasurys] will be one of the products that will regain trust of users over time,” he said.



Holding tokenized T-bills still comes with risks.&nbsp;



The first, albeit highly unlikely, risk is government default. The second is smart contract risks.



“Usually 95% of assets are deployed, only 5% is held in a vault for withdrawals, so that 5% is subject to smart contract riks,” he said.



As Finblox is a regulated entity, it requires customers to complete two levels of regulation before being eligible to purchase Treasurys: ID verification and proof of address.



“We determine the limits for deposits and withdrawals based on the verifications,”&nbsp; Hoang said.



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emerging markets

Tokenized US Treasury bills are entering emerging markets

<div id="highlights-block_62cc896670df4" class="highlights">
 <ul>
 <li>“The true benefit of blockchain technology comes through moving cryptoassets,” Philipp Sandner, founder of the Frankfurt School Blockchain Center, told Blockworks</li>
 <li>“Within 10 minutes maximum, I get the funds in my local account.”</li>
 </ul>
 
</div>



Individuals who live in nations that are experiencing hyperinflation or have a history of financial instability are increasingly accepting cryptocurrencies as their main source of income.



In countries such as Argentina, Brazil, Turkey and parts of Africa, people are turning to cryptocurrencies as inflation runs hot, Philipp Sandner, founder of the Frankfurt School Blockchain Center, told Blockworks.&nbsp;



Companies utilize blockchain technology to source talent worldwide and pay their employees in cryptocurrencies, such as bitcoin, ether and US dollar-pegged stablecoins, as a cost-effective alternative to traditional international money transfers.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The true benefit of blockchain technology comes through moving cryptoassets,” Sandner said.</blockquote>



Individuals employed by companies based in other countries find digital assets particularly useful.&nbsp;



Joel Oshiegbu, a Nigerian employed by Berlin-based crypto accounting solution basenode.io, is currently being paid in tether (USDT) by his employer “because it&#8217;s the most popular stablecoin, easier to get a buyer and less susceptible to a bank run,” he said.



Once Oshiegbu receives his paycheck, he sends the funds to an exchange and sells his assets.&nbsp;



&nbsp;“Within 10 minutes maximum, I get the funds in my local account,” he said.



Nigeria banned bank-trading of cryptocurrencies in February 2021 and launched its own digital currency, the eNaira, in October, but the prohibition has not stopped the Nigerian crypto community from engaging in peer-to-peer trading.&nbsp;



A recent Chainalysis <a href="https://blog.chainalysis.com/reports/2021-global-crypto-adoption-index/https://blog.chainalysis.com/reports/2021-global-crypto-adoption-index/" target="_blank" rel="noreferrer noopener">report</a> looked at “countries with the greatest cryptocurrency adoption by ordinary people” and ranked Nigeria sixth in the world for cryptocurrency adoption and 18th in peer-to-peer exchange trade volume.



A 2020 World Bank report shows that the cost of remittance is at <a href="https://remittanceprices.worldbank.org/sites/default/files/rpw_main_report_and_annex_q42020.pdf" target="_blank" rel="noreferrer noopener">6.5%</a>, more than double the United Nations’ Sustainable Development Goal of 3%. In comparison, cryptocurrency transfers are much cheaper because they don’t come with bank fees and foreign exchange rates.



“Using other methods to receive funds, I lose 2% to 5% of funds received,” Oshiegbu said. “The conversion rate is determined by the platform and is usually less than the current market rate, also the conversion to local will cost some additional funds.”&nbsp;



With crypto, it&#8217;s almost zero cost, Oshiegbu said.&nbsp;



“I get the full value, and it&#8217;s faster,” he added.&nbsp;&nbsp;



At the time of writing, sending ether on Ethereum mainnet costs roughly <a href="https://ycharts.com/indicators/ethereum_average_transaction_fee" target="_blank" rel="noreferrer noopener">$0.71 USD</a>. ​​Stablecoin transfers are a bit more. While layer-2 networks should reduce costs considerably, transaction fees are already significantly less than outbound international wire transfers from traditional banks such as Bank of America, which <a href="https://www.bankofamerica.com/foreign-exchange/wire-transfer/" target="_blank" rel="noreferrer noopener">charges $45</a>. 



Oshiegbu’s employer, Oliver Schantin, co-founder and CEO of basenode.io, says employees can pick which token they wish to be paid in, or have the option to be paid in fiat currencies.



“Usually people don’t want to be paid in bitcoin or ether because it’s volatile, so they prefer something that is pegged to the US dollar,” Schantin said.&nbsp;



This sentiment is echoed by Melissa Quinn, chief operating officer at UMA protocol, an optimistic oracle with around thirty employees based in ten different countries including Canada, the US, Brazil and Argentina.&nbsp;



“We steer away from payment in ETH and BTC, not because we don&#8217;t believe in it, but just because the volatility makes it hard,” Quinn said.&nbsp;



Price volatility is not simply limited to ETH and BTC, Quinn said.&nbsp;



“We actually see [volatility] with exchange rates and local fiat currencies as well, which is why we offer to pay in USDC, because it stabilizes and levels the playing field for all our employees internationally.”



<h3 class="wp-block-heading">Broadening the talent pool&nbsp;&nbsp;</h3>



Paying international employees in cryptocurrencies does not only benefit the worker, employers are also given access to a significantly larger talent pool.



“This brings about a diversity of cultures and perspectives that can greatly impact the organization&#8217;s ability to build great products,” Lena Bachmeyer, technical recruiter at Set Labs, told Blockworks.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The flexibility and making it easier to integrate daily life with work in a meaningful way is one of the main benefits that interest people in making the career switch to Web3.”</blockquote>



For Schantin, paying employees through cryptocurrencies has also allowed basenode.io to hire talent in sanctioned countries, such as Iran, with volatile local currencies.



An Iranian employee who spoke to Blockworks under the condition of anonymity said they tend to keep payments as stablecoins on KuCoin, a crypto exchange based in Seychelles.&nbsp;



“But, if needed, I will use another wallet address, created on a local crypto exchange, this way I convert the received funds to my local currency instantly and deposit them into my bank account in less than 2 minutes,” the employee added.&nbsp;



The employee has used crypto to pay for rent, Amazon gift cards and books, they said.&nbsp;



“Getting paid in cryptocurrency has been a really pleasant experience for me,” the employee said. “I believe the speed and fees offered by cryptocurrencies can make working remotely or across borders much more convenient and will help us create more efficient markets.”



<h3 class="wp-block-heading">The limitations of blockchain technology</h3>



Although there are many upsides to paying employees in cryptocurrencies, crypto salary payments are not available to individuals living in countries with strict cryptocurrency regulations.&nbsp;



The US reimposed sanctions on Iran in 2018 and recently crypto exchange Binance had&nbsp; <a href="https://www.reuters.com/technology/exclusive-binance-served-crypto-traders-iran-years-despite-us-sanctions-clients-2022-07-11/" target="_blank" rel="noreferrer noopener">reportedly</a> served Iranian crypto-traders, though no evidence that sanctioned individuals used Binance was found. This exposure will only harm Binance if sanctioned Iranian clients on their platform dodge the US trade embargo as a result of the transactions.



Most recently in China, salary payments in the form of USDT were banned, stating that digital currencies did not have the same legal status as legal tenders, according to Cointelegraph.



In the United States, crypto paychecks still sit in a relatively gray area. The IRS defines cryptocurrencies as “<a href="https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions" target="_blank" rel="noreferrer noopener">properties</a>,” and any profit made from buying or selling cryptocurrencies is subject to capital gains taxes. Income from cryptocurrencies must reflect the market cash value of the currency on the day you were paid, so the value of your currency will fluctuate based on the value of the cryptocurrency you choose to be paid in.



“​​From a legal perspective and depending on the country or state, it can be difficult for organizations to pay employees in crypto. For the employee or contractor, being paid in crypto can be challenging for the same reasons,” Bachmeyer said.



This story was updated on July 12, 2022 at 7:55 am ET.



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Crypto Increasingly Used To Pay Salaries in Developing Economies

Tiago Varzim

<div id="highlights-block_62b5fedbcdef0" class="highlights">
 <ul>
 <li>High inflation and unstable currencies place stablecoins as an alternative to maintain value in emerging or developing countries</li>
 <li>As stablecoins are predominantly US-dollar pegged, dollarization is set to increase in these economies</li>
 </ul>
 
</div>



Cryptoassets may be volatile, but they have also gained worldwide attention as alternatives to unstable fiat currencies. In particular, experts believe that high inflation coupled with a potential world recession could boost dollar-pegged stablecoins adoption in emerging or developing markets, accelerating dollarization.&nbsp;



Maxim Ermilov, the founder of Overnight, which launched an interest-bearing stablecoin on Polygon’s proof-of-stake chain called USD+, told Blockworks that “people try to protect their savings against high inflation and potential devaluation and often choose to save in dollars.” 



But that’s not always easy. In some countries, banks have a high risk of default and stockpiling dollars in cash is a costly and risky strategy.



“Stablecoins are solving those problems in emerging markets: It is hard currency, easier to store than cash, not prone to banks&#8217; failures, [and] can be used to generate yield,” Ermilov said. 



Inflation is a hot topic in advanced economies, where it has been unusually high, but it’s nothing new to some emerging or developing economies. In inflationary environments, some national currencies depreciate, particularly so when a country’s central bank has no independence from political power.&nbsp;



“Stablecoins have been growing independently of market cycles”, said Hugo Volz Oliveira, secretary-general of the New Economy Institute, a nonprofit founded by leading Web3 companies and backed by the Near blockchain, the web browser Brave and several Portuguese universities.



He told Blockworks Tether (USDT) was launched in 2014, but “only became widely adopted during the 2017 boom.” Even in the Covid-induced crash in March 2020, “stablecoin supply increased while crypto prices dropped, implying that bearish periods indeed contribute to a rise in stablecoin adoption.”



Even the International Monetary Fund (IMF) acknowledged that an economic turmoil could result in further dollarization of economies, especially with its digital versions like USDT or USD Coin (USDC) which are easily available worldwide. 



“It is possible that national currencies issued by their central banks, particularly currencies seen as less convenient to use or volatile in value, could be displaced by stablecoins — private cryptocurrencies issued by multinational corporations or global banks and usually backed by US dollars to maintain stability — or by CBDCs issued by major economies,” IMF’s economists wrote in a <a href="https://www.imf.org/en/Publications/fandd/issues/2022/06/enduring-preeminence-eswar-prasad" target="_blank" rel="noreferrer noopener">publication released</a> in June.



“Even a volatile cryptocurrency such as Bitcoin might, in addition to enabling capital flight, be preferred to the local currency during economic turmoil,” the IMF noted.



However, where bitcoin became successful as an alternative to local currency in the past, stablecoin adoption might come faster as the population is more familiar with the underlying technology driving crypto markets, in part thanks to bitcoin.&nbsp;



“This adoption will also increase substantially if these stablecoins and cryptoassets can improve financial inclusion in places where banking is inefficient and transaction costs are high,” Volz Oliveira said. 



One practical example of this is when workers in the developing countries work for employers in wealthier countries, being paid digitally without dealing with employers’ cumbersome financial systems is an asset. The same goes for remittances from family members abroad.&nbsp;



<h3 class="wp-block-heading">Stablecoins don’t protect populations against bans or seizures</h3>



If the problem isn’t depreciation of the currency but an authoritarian regime, stablecoins won’t be the answer. Unlike bitcoin, ether, and a handful of other cryptoassets which are decentralized by design, stablecoins tend to be centralized. That means “their users are liable to bans or seizures by rogue governments, whereas bitcoin and some other projects are resistant to such attacks,” Volz Oliveira said. 



In June, many human rights advocates highlighted how cryptoassets could be a tool for political dissidents in many countries around the world. In a letter to the US Congress quoted by <a href="https://www.cnbc.com/2022/06/07/human-rights-advocates-say-bitcoin-critical-in-authoritarian-countries.html" target="_blank" rel="noreferrer noopener">CNBC</a>, 21 human rights supporters from 20 different countries explained how these digital assets are important where “local currencies are collapsing, broken, or cut off from the outside world.”



“We do not claim that Bitcoin and stablecoins solve every problem, or that they are entirely positive or without risk,” they recognize. Yet, “this open and decentralized monetary network will help defy tyranny and strengthen democratic movements abroad.”. &nbsp;



The letter cites places such as Nigeria, Turkey, and Ukraine where, according to 2021 data from CryptoCompare, crypto activity has increased significantly — in Turkey (+85.4%) and Ukraine (+218%). In both countries, stablecoin dominance rose above the euro’s dominance, for example.



“Moreover, our data shows a growth in crypto activity this year, despite the downward trend in price action,” says Jacob Joseph, research and data analyst from CryptoCompare.



In Nigeria, the trend goes in the opposite direction. The crypto trading volume has declined by 97.7% during the same period, which can be attributed to the central bank’s warning against cryptocurrency in February last year.&nbsp;



As this analysis is based on the transaction volume between stablecoin and fiat pairs, it’s not possible to conclude that there is more or less capital moving into stablecoins in these countries, even though it does indicate more interest in the assets generally.



<h3 class="wp-block-heading">Is it really a safe asset?</h3>



The reality is not all stablecoins are created equal, of course. TerraUSD (UST) is only the latest example of how an apparent safe asset <a href="https://cms.blockworks.co/?s=terra" target="_blank" rel="noreferrer noopener">can go off the rails</a>. The collapse raised skepticism around stablecoin adoption, although experts think the setback will be temporary. 



“Many people got enticed by high-interest rates Anchor offered on [algorithmic stablecoin] UST and put their savings there. Unfortunately, a lot of people got deceived by the term &#8216;stablecoin&#8217; when referring to UST,” said Ermilov.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“There are stablecoins and stablecoins…it takes specialists or regulators to tell the difference and explain to the consumer that only [some] types are safe.” </blockquote>



But there may be a silver lining. “Even if many are currently cheering at the downfall of Terra and the potential insolvency of Celsius, one can&#8217;t forget these centralized projects don&#8217;t represent the industry and that the potential of this technology to improve the world&#8217;s financial system and benefit the lives of the many still stands strong,” Volz Oliveira said. 



Regulation may help, and progress is being made both <a href="https://cms.blockworks.co/eu-negotiators-want-to-hammer-out-crypto-bill-this-month/" target="_blank" rel="noreferrer noopener">in the European Union</a> and the <a href="https://cms.blockworks.co/bipartisan-crypto-bill-hits-congress-with-focus-on-cftc-jurisdiction-taxes/" target="_blank" rel="noreferrer noopener">US Congress</a> to address cryptoasset rules. 



“It&#8217;s only natural that most of the regulation concerns stablecoins, and the control of its issuance in ways that promote financial stability and avoid contagion in case of a crisis,” Volz Oliveira added, predicting that this “should bring more confidence into the system, both in Europe and abroad, as EU regulation is often followed by other countries and regional blocks.”



Ermilov also believes that future European crypto regulation will “clearly differentiate between different types of stablecoins,” therefore supporting and promoting “compliant stablecoins” instead of “algorithmic” stablecoins.



“Had it been in place earlier, the UST disaster could have been avoided or minimized,” he said.



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Dollar

Global Stablecoin Adoption Points to Increased Dollarization

Casey Wagner

<div id="highlights-block_628fba706c69f" class="highlights">
 <ul>
 <li>Emerging markets see potential in central bank digital currencies for increasing financial inclusion and decreasing cash dependency</li>
 <li>Infrastructure and privacy concerns continue to be top barriers</li>
 </ul>
 
</div>



With more than half of central banks worldwide working on digital currency initiatives, the US dollar-dominated payment network may in relatively short order become a thing of the past, according to the <a href="https://www.bis.org/publ/bppdf/bispap123.htm" target="_blank" rel="noreferrer noopener">Bank for International Settlements</a>.&nbsp;



Emerging markets are at the forefront of the central bank digital currency (CBDC) movement, industry leaders say, a trend attributed to these economies having more pressing, fundamental needs than those of more developed markets.&nbsp;



“Emerging economies appear to view CBDCs as a way to jump start their economies,” said Steve Aschettino, a Norton Rose Fulbright partner concentrating on fintech. “More-developed nations have existing and widely adopted electronic payment mechanisms already in place. While one may say this is an advantage, their existing payments technology can also serve as a barrier to the creation and broad adoption of a CBDC.”



Emerging markets looking into CBDCs have similar goals and motivations, the BIS said in a <a href="https://www.bis.org/publ/bppdf/bispap123_a_rh.pdf" target="_blank" rel="noreferrer noopener">report</a> earlier this month.&nbsp;



“Providing a cash-like digital means of payment, in light of reduced cash usage and an increase in private digital payment services, is the most common consideration,” the report said. “Other significant considerations include strengthening competition among payments service providers (PSPs), increasing efficiency and reducing the costs of financial services.”&nbsp;



<a href="https://cms.blockworks.co/jamaica-to-launch-cbdc-this-summer/" target="_blank" rel="noreferrer noopener">Jamaica</a>, Brazil, Nigeria and Haiti are among the countries currently looking into establishing or expanding CBDC pilots. For cash-driven economies such as Jamaica, CBDCs allow for cheaper, safer and more efficient transactions, Central Bank of Jamaica Governor Richard Byles said.&nbsp;



“If you can imagine what it costs a business, especially a high cash-volume business, to manage that cash: to keep it, to store it, to transport it — digital currencies get rid of all that,” Byles said in a recent interview.



CBDC infrastructure provider EMTECH has worked with the Bank of Ghana, the Central Bank of the Bahamas and the Central Bank of Nigeria on CBDC infrastructure projects in recent years. The company most recently partnered with HaitiPay, a Haitian fintech company, to demo a CBDC and fintech proof-of-concept in the region. The goal was to showcase the impact a CBDC can have on the Haitian economy, according to Carmelle Cadet, founder and CEO of EMTECH.  



“Being born and raised in Haiti, I have a view of how many people are unbanked and underbanked,” Cadet said. “When I discovered what blockchain was, I realized that there was a solution that could bypass where people are from and how much money they had and get them access to better financial resources.”&nbsp;



Although interest in digital currency has grown, most CBDCs are still in early pilot stages, and those that have progressed further are not yet widely used, said Kenneth Goodwin, director of regulatory and institutional affairs at Blockchain Intelligence Group. The Central Bank of the Bahamas’ Sand Dollar, which became the world’s first CBDC in 2020, has faced distribution issues, he said.



“I speak to John Rolle, who is the head of the Central Bank of the Bahamas, he&#8217;s not a big fan of the idea of all of this, quite frankly,” Goodwin said. “His job has become a lot more challenging because he&#8217;s taking this digital asset and trying to find a way to implement that into the system where they used to have a fiat currency.”&nbsp;



A huge benefit of CBDCs for central banks, Goodwin said, is the ability to better understand where — and how — people are spending. The transparency, of course, brings up privacy concerns as well.&nbsp;



“Anytime you digitize any platform, you&#8217;ll increase both cybersecurity risk and data privacy risk,” Goodwin said. “Data privacy is very, very key in terms of who owns the data, whether that data is being owned by the individual or is being owned by the central government, and that is a huge issue.”&nbsp;&nbsp;



Infrastructure is also a key concern, Aschettino said. Limited broadband access in many countries looking into CBDCs can significantly limit distribution, he said.&nbsp;



“These countries have to do a full assessment first to see that the citizens have access to the internet,” Goodwin said. “They&#8217;re going to have to do an assessment first and not get caught up with the technology, which is what often happens, they get caught up with the technology, but they don&#8217;t think about the infrastructure.”



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Brazil

Why Emerging Markets Are Leading the Charge on CBDCs

Ben Strack

<div id="highlights-block_61dc74a1aad2d" class="highlights">
 <ul>
 <li>Blockchain.com wants to be one of the biggest financial institutions in Latin America, Chief Business Officer Lane Kasselman said</li>
 <li>A large traditional bank buying Blockchain.com or other large crypto firms is unlikely in the current regulatory environment, the executive argued</li>
 </ul>
 
</div>



Blockchain.com made several notable acquisitions last year and is looking at more such opportunities to expand across several emerging markets.&nbsp;



The <a href="http://blockchain.com" target="_blank" rel="noreferrer noopener">London-based crypto firm</a>, which offers users the ability to buy, sell and trade crypto, has 80 million wallets across 200 countries. Its $300 million investment round in March gave the company a $5.2 billion valuation.



Blockchain.com is focused on building its footprint across regions such as Latin America, Africa and Eastern Europe, Blockchain.com Chief Business Officer Lane Kasselman told Blockworks in an interview.&nbsp;&nbsp;



“We are looking at markets where the customers need crypto, because they’re much more sticky, they don’t react the same way to market volatility and they’re much more interested in a wide variety of products and services,” he explained.



Blockchain.com announced in November its acquisition of SeSocio, an Argentina-based crypto company that also has a presence in Brazil, Chile, Colombia, and Mexico. The addition of SeSocio’s 100 employees brought Blockchain.com’s global headcount to roughly 400.&nbsp;



While the acquisition made Blockchain.com the largest crypto company in the region, Kasselman said, it is now looking to become one of the biggest financial institutions in Latin America.



“Companies that try to parachute in and build their business in countries where they don’t have a significant staff presence often times stumble,” the chief business officer noted.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“The real strategy is acquiring somebody who’s already one of the market leaders and working through them to really grow your business.”</blockquote>



Kasselman noted that there are more than 200 million unbanked individuals in Latin America, which he said is often due to unsafe or inaccessible banking systems. Crypto has helped solve that issue and has opened them up to a digital ecosystem.&nbsp;&nbsp;



“Maybe they’re looking for a safe store of value,” Kasselman said. “But they’re also looking for access to Netflix and Spotify, and so their crypto wallet or blockchain wallet becomes an onramp.”



The executive said that Blockchain.com is not currently focused on building its presence in India due to an uncertain regulatory environment in the country.&nbsp;&nbsp;&nbsp;



<h3 class="wp-block-heading">Product outlook for Blockchain.com</h3>



Kasselman noted that the first financial services accounts for some younger investors, such as recent college graduates, is a crypto wallet. He added that the demand for such customers, and others, is often around crypto offerings that mirror more traditional financial services.



The company launched margin trading on its exchange in October to allow users to access margin with up to five times leverage in the bitcoin-to-US dollar and ether-to-USD trading pairs in more than 150 countries. It has also set up a waiting list for debit cards, Kasselman said. 



Different markets have different needs, he added, noting that users in Latin America and Africa are more interested in seamless remittances to move value across borders, as well as less volatile tokens that may provide a safer store of value.



“Blockchain.com is less in the business of predicting what customers want and more in delivering to them exactly what they are asking for,” Kasselman explained.



<h3 class="wp-block-heading">Crypto M&amp;A more broadly</h3>



In addition to its purchase of SeSocio last year, Blockchain.com acquired artificial intelligence startup AiX last May to bolster its institutional business. The company also bought French consumer startup Storm Inc. and Magic Carpet, a machine learning and AI company, in October.&nbsp;



Mergers and acquisitions within the crypto sphere accelerated last year, a trend that <a href="https://cms.blockworks.co/what-could-crypto-ma-look-like-in-2022/" target="_blank" rel="noreferrer noopener">industry watchers have predicted</a> will continue in 2022. M&amp;A deals involving at least one company in the crypto sector totaled 169 in 2021, as of mid-December, compared to 59 deals in the year prior, according to data from M&amp;A advisory firm Architect Partners.&nbsp;



There is no shortage of ideas and teams within the crypto space, Kasselman explained, but many struggle to attract users.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Everyone wants to move fast in crypto, and it’s really hard to move fast unless you have access to a big customer account,” he said. “I think we’ll see a lot of rapid consolidation, especially if the market continues to be a little less hot.”</blockquote>



Bitcoin’s price was at about $41,300 at 1 p.m. ET, according to <a href="https://www.coingecko.com/en" target="_blank" rel="noreferrer noopener">CoinGecko</a>, a decrease of roughly 13% from seven days ago.&nbsp;



SkyBridge Capital Founder Anthony Scaramucci <a href="https://cms.blockworks.co/are-tradfi-and-crypto-set-for-an-ma-explosion/" target="_blank" rel="noreferrer noopener">previously said</a> he expects that a big bank frustrated by the growth of decentralized finance could buy a crypto firm such as Coinbase.&nbsp;



Though some banks have dabbled in crypto by offering clients indirect exposure to the asset class, Kasselman noted that such a transaction, or one involving a large traditional firm buying Blockchain.com, is unlikely in the current regulatory environment.



“I do think we are at the beginning of what is a two-year cycle of a permanent regulatory framework being established across the US and the EU, so it’ll look very different in a couple of years,” Kasselman said. “But right now it’s very hard for those sort of old, stoic, publicly traded companies to think about entering a space…that doesn’t really have clear rules.”